Every year, thousands of student loan borrowers lose money to errors they didnโt even know existed. According to the CFPBโs latest report, these mistakes cost borrowers an average of $14,000 each.
Think about thatโ$14,000. Imagine what you could do with that money instead: pay down other debt, save for a house, or invest in your future.
At FitBUX, weโve seen these errors firsthand, helping young professionals manage over $2 billion in student loans. The truth is, many of these problems arenโt new, but theyโre still draining borrowersโ wallets. Letโs break down the biggest mistakes revealed in the report and, most importantly, how you can protect yourself.
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1. Incorrect Payment Amounts
This is one of the most commonโand costlyโerrors. Borrowers on income-driven repayment (IDR) plans often find their monthly payments miscalculated.
Hereโs why it happens:
- Borrower Errors: Many people submit incomplete or incorrect information when applying for IDR plans.
- Servicer Errors: Loan servicers frequently mishandle applications or miscalculate payments.
These mistakes can leave you paying too muchโor not enough, which could disqualify you from forgiveness programs.
How to Fix It:
Before submitting your IDR application, double-check every detail. If possible, work with a financial expert or use tools like FitBUX to ensure your payment amount is accurate. Donโt assume your loan servicer will get it right.
2. Auto-Pay Mistakes
Auto-pay might seem like a great way to manage your loans, but itโs often a hidden trap. Weโve seen borrowers fall victim to three major auto-pay errors:
- Misapplied Prepayments: Extra payments often get spread across multiple loans instead of being applied to the highest-interest loan.
- Unadjusted Required Payments: When a loan is paid off, your required payment should drop, but servicers rarely adjust auto-pay amounts automatically.
- Wrong Loan Payoffs: Even when borrowers specify where prepayments should go, servicers frequently misallocate the funds.
How to Fix It:
Set auto-pay only for your required payment amount. Make extra prepayments manually to ensure theyโre applied to the right loan. And if you pay off a loan, call your servicer to adjust your required payment.
3. Misapplied Payments
Even if youโve been diligently making payments, thereโs no guarantee your servicer has applied them correctly. This issue is especially problematic for borrowers pursuing loan forgiveness.
Hereโs what weโve seen:
- Prepayments: Funds are often applied to the wrong loans, even after borrowers provide clear instructions.
- Loan Forgiveness: Months of qualifying payments are sometimes not counted correctly, costing borrowers years of progress toward forgiveness.
How to Fix It:
Regularly review your payment history to ensure every dollar is applied correctly. If you notice errors, file disputes immediately. FitBUX has helped thousands of members resolve these issuesโitโs worth having a trusted partner in your corner.
4. Wrong Repayment Plans
Loan servicers are not financial advisors. Yet borrowers often rely on them for guidance, only to end up on plans that cost far more than necessary.
For example, weโve seen borrowers placed on standard repayment plans when they qualify for income-driven plansโor extended repayment plans that rack up unnecessary interest.
How to Fix It:
Do your own research or consult a financial expert to determine the best repayment plan for your situation. Donโt rely on your servicer to save you moneyโtheyโre there to process paperwork, not to act in your best interest.
Whatโs the Cost of These Errors?
According to the CFPB, the average borrower with a disputed error has $14,000 at stake. These mistakesโincorrect payments, auto-pay errors, misapplied funds, and wrong repayment plansโarenโt just inconvenient. Theyโre draining your hard-earned money.
At FitBUX, weโve helped thousands of members identify and correct these issues. For just $189 a year, you can have a financial management strategy, access to expert advice, and someone tracking your loans to make sure youโre not losing money to these costly mistakes.
Take Action Today:
Donโt wait until these errors cost you thousands. Join FitBUX to take control of your student loansโor, if youโre not ready yet, check out more tips in our video on managing student loans effectively.
